(NEW YORK, NY) -- The former head of a Wall Street banking firm pleaded not guilty today to charges that he shared insider secrets about upcoming mergers with a porn star during their 14-month affair.

James McDermott, 48, whose chairmanship of a Wall Street firm specializing in bank mergers ended in June after securities regulators began an investigation, entered his plea before a federal magistrate in Manhattan, accompanied by his attorney, Denis McInerney.

He has been free on $100,000 bond since surrendering to the FBI in December on charges that he gave confidential information about six mergers involving his firm's clients to Kathryn Gannon, an adult-movie actress who uses the screen name "Marilyn Star."

A federal indictment returned last week alleges that Gannon earned $88,000 by trading on the information and that she shared the information with Anthony Pomponio, 45, a New Jersey businessman she met at a pornography trade show in Atlantic City.

The indictment charges Pomponio made $86,000 in profits by trading on information he obtained from Gannon.

Actress may be hiding in Canada

Pomponio and McDermott were the last defendants to be called before U.S. Magistrate Kevin Fox in a courtroom filled with attorneys, reporters, women and children and other defendants, most of them wearing blue jail uniforms.

McDermott wore a dark suit and silk tie and awaited his turn outside the courtroom, leaning on a wall behind the doors of the room. Once inside, he and Pomponio stood shoulder to shoulder as they entered their pleas.

"My client is not guilty, and he is looking forward to proceeding in court and facing the charges," Pomponio's attorney, Thomas F.X. Dunn, said afterward.

Gannon, 30, was absent. She has eluded arrest and has reportedly been hiding in the Vancouver home of her fiancé, a Canadian businessman named Michael Gilley.

SEC pursuing civil suit

The U.S. attorney's office said today that authorities have reissued a warrant for her arrest. A spokesman for Gannon said the 4-foot-11-inch stripper-turned-actress remains in "western Canada" but plans to come back to the United States.

"She is working very diligently with the people that are helping her and her lawyers to resolve the situation. She is not planning to be a fugitive from justice one second longer than she has to be," said Marc MeDoff, president of the Adult Press Service. "Kathryn is a very public, very friendly, very outgoing person. It's very against Kathryn's nature to be hiding in any form. Kathryn has no plans to spend the rest of her life being unable to enter the United States."

Besides criminal charges of insider trading, the Securities and Exchange Commission (SEC) is pursuing a civil suit against the trio.

If found guilty of civil charges, each would be required to return their illegally gained profits and would face three times the amount in penalties, said SEC Assistant Director of Enforcement Paul Berger.

The criminal charges carry a five-year prison sentence for conspiracy, a 10-year sentence for each count of insider trading and a fine of up to $1.25 million for each defendant.

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